10/8. The House approved
HR 3159,
the "Government Network Security Act of 2003" by a voice vote. This bill
requires federal government agencies to develop and implement
plans to protect the security and privacy of government computer systems from
the risks posed by peer-to-peer (P2P) file sharing.

HR 3159 is sponsored by Rep. Henry Waxman
(D-CA), Rep. Tom Davis (R-VA),
and others. Rep. Davis on October 8 stated that "file sharing programs create
a number of risks
for federal departments and agencies if they are installed on government
computers. The federal government uses and stores a wide variety of classified
and sensitive information, including information vital to national security,
public health, and the personal and financial records of U.S. citizens and
businesses. Installing these programs on government computers can cause this
sensitive information to be exposed to the public. Because files are shared
anonymously on peer to peer networks, there is also a risk of the spread of
viruses, worms, and other malicious computer files."

The Senate has not passed this bill. However, the
Senate Judiciary Committee
has held hearings that have addressed the use of P2P software at government
agencies. See, stories titled "Senate Committee Holds Hearing on P2P Networks" in
TLJ Daily E-Mail
Alert No. 683, June 18, 2003; and "Senate Judiciary Committee Hears
Testimony on Copyright Infringement on P2P Networks" and "Senate Judiciary
Committee Hears Testimony on Porm on P2P Networks", in TLJ Daily E-Mail Alert No.
736, September 10, 2003.

FCC Issues LNP Order

10/7. The Federal Communications Commission
(FCC) issued a
Memorandum Opinion and Order (MOO) [pages in PDF] in its proceeding titled "In
the Matter of Telephone Number Portability -- Carrier Requests for Clarification
of Wireless-Wireless Porting Issues". This MOO addresses wireless-wireless,
but not wireless-wireline, local number portability (LNP) issues.

The MOO states that it offers "further guidance to the industry as it nears the
November 24, 2003, deadline to provide wireless local number portability (LNP).
The guidance we offer today is applicable to wireless-wireless porting only. We
intend to address issues related to wireline-wireless porting in a separate
order. Today, in response to a Petition for Declaratory Ruling/Application for
Review, we hold that while carriers may agree to rules with their customers via
contract, such rules may not restrict carriers' obligations to port numbers to
other carriers upon receipt of a valid request to do so." (Footnote omitted.)

The MOO continues that "we address several separate LNP implementation
issues that have been raised in the context of the Cellular Telecommunications &
Internet Association's May 13th Petition for Declaratory Ruling. We clarify that wireless
carriers may not refuse a request to provide LNP from another wireless carrier on the
basis of the lack of proximity of the requesting carrier’s switch to the porting out
carrier’s switch. We confirm also that interconnection agreements are not required for
wireless to wireless porting and that, in cases where wireless carriers are unable to
reach agreement regarding the terms and conditions of porting, all such carriers must
port numbers upon receipt of a valid request from another carrier, with no conditions.
We encourage wireless carriers to complete ``simple´´ ports within the industry-established
two and one half hour porting interval. We find that no action
is necessary regarding the porting of numbers served by Type 1 interconnection because
carriers are migrating these numbers to switches served by Type 2 interconnection or are
otherwise developing solutions. Finally, we reiterate the requirement that wireless carriers
support roaming nationwide for customers with pooled and ported numbers, and we address
outstanding petitions for waiver of the roaming requirement." (Footnote
omitted.)

Tom Wheeler, P/CEO of the
Cellular Telecommunications & Internet Association (CTIA), stated in a
release
that "The industry is hard at work implementing these daunting upgrades. But
with the deadline only 49 days away, the Commission still has not answered some
basic implementation questions ... The FCC has simultaneously managed to tie the
industry's hands and hold our feet to the fire." He added that "The Commission
has yet to determine when a wireline carrier must port a customer's telephone
number to a wireless carrier. If this issue is not resolved, the practical
effect is that 85% of wireline customers will NOT be able to port to wireless."

The FCC adopted a
Declaratory Ruling and Notice of Proposed Rulemaking [75 pages in PDF] at
its March 14, 2002 meeting. This is FCC 02-77 in Docket No. 00-185 and Docket
No. 02-52. See,
TLJ story titled
"9th Circuit Vacates FCC Declaratory Ruling That Cable Modem Service is an Information
Service Without a Separate Offering of a Telecommunications Service", also
published in TLJ Daily E-Mail Alert No. 754, October 7, 2003.

Brenner wrote that "The decision is a strained reading of an earlier Ninth
Circuit case to which
the three-judge panel felt legally bound. By virtue of the prior decision in
AT&T v. City of Portland, the panel felt compelled to characterize cable modem
service as a telecommunications service, a legally erroneous conclusion that
neither Congress nor any other U.S. court has ever reached. Well-established U.S.
Supreme Court precedent provides that where a statute
is ambiguous, courts are compelled to defer to reasonable agency
interpretations. Because of the odd legal juxtaposition of the Brand X appeal
and the prior Portland case, the panel failed to defer to the FCC." He added
that the "NCTA fully supports an FCC appeal."

Meanwhile, Randolph May of the Progress &
Freedom Foundation (PFF) stated that "The Commission should not allow the
Ninth Circuit's panel decision to prevent it from proceeding promptly to do
whatever is necessary to ensure that cable broadband services are free from
traditional common carrier regulation ... Even if the Ninth Circuit's
legally questionable interpretation concerning the classification of cable modem
services were correct, the FCC has authority under the 1996 Act, and already has
compiled a sufficient record, to forbear from regulating broadband services. In
light of the competitive nature of the services, the agency should exercise such
authority without delay." See, FCC
release.

In contrast, Dave Baker, VP of law and public policy at
EarthLink (which challenged the FCC's
declaratory ruling), stated that the 9th Circuit's opinion "vindicates what
EarthLink has been telling the FCC for five years now, that cable modem service
contains a telecommunications service. As the Court noted in its decision, ‘The
practical result of such a classification is that cable broadband providers
would be required to open their lines to competing ISPs.’ Cable modem users
deserve choice in high-speed Internet providers. Today’s ruling is a big step
towards finally affording them that choice." See,
release.

10/8. Federal Reserve Board (FRB) Vice
Chairman Roger Ferguson gave a
speech
in Boston, Massachusetts titled "The Future of Financial Services -- Revisited".
He discussed the impact of technological change on both the production and
consumption of financial services.

Ferguson (at right)
discussed how financial institutions have used new
technologies to better manage risk. He stated that "I also point to another reason
that the U.S. banking system has performed so well over the current economic
cycle. This factor is the truly impressive improvement in methods of risk
measurement and management and the growing adoption of these technologies by
mostly large banks and other large financial intermediaries over the past five
years. To be sure, at most banks the application of these methods is still in
its infancy, if it has begun at all, and even the most advanced banks have room
for improvement. But modern advances in the quantification of risk and in its
management have provided bank management with a far more disciplined and
structured process for evaluating loans, pricing risks, and deciding which risks
to retain."

This is a subject that FRB Chairman
Alan Greenspan has
also addressed at
length. See, for example,
speech of October 7, 2002, and story titled "Greenspan Addresses Importance
of Computing, Databases and Data Mining to Banking System" in
TLJ Daily E-Mail
Alert No. 525, October 8, 2002.

Ferguson also made the point the new technologies have played a role in "breaking
down traditional distinctions between commercial banking, investment banking,
and insurance products". He added that "the Gramm-Leach-Bliley Act can be
thought of as a response to technological change".

He then focused on the use of information technology by consumers of
financial services. Although, he conceded that here, "the process remains a
considerable mystery".

He noted that "many academics, regulators, and bankers have for many years
forecast that technological change would end use of the paper check and make the
brick-and-mortar bank branch obsolete. However, here we are in October 2003 and
the paper check is still very much in use, the smart card has not succeeded as
predicted, and the number of brick-and-mortar bank offices is still increasing."

He offered some analysis. He reviewed data collected by the FRB in its
triannual Survey of Consumer Finances. In 1998, 6 percent of households had used
a computer to conduct business with their financial institutions, while 80
percent had used an in person visit to an office. In 2001, almost 20 percent
responded that they had used a computer, while 78 percent had visited an office.

Ferguson said that "While one cannot draw any strong conclusions from this
small number of facts, they support the view that, in matters of finance,
households tend to adopt technological change only gradually. In addition, even
when new technologies start to gain more widespread acceptance, old technologies
are abandoned rather slowly and many users perhaps view the old and new
technologies more as complements than as substitutes."

He concluded that "Research conducted by the Federal Reserve Board's staff
reinforces the notion that the adoption of technological change is a highly
complex process. For example, it appears that income, education, age, and other
factors, perhaps even a household's attitudes toward risk, play important roles
in determining a household's willingness to adopt new technologies for the
consumption of financial services. On balance, I would suggest that strategic
planners at financial institutions will need to take a wide variety of factors
into account in planning and marketing technological innovations."

President Bush has renominated Ferguson to be Vice Chairman of the FRB. The
Senate Banking Committee will hold
a hearing on his renomination on October 14, 2003.

10/2. Ben Wu, Deputy Under
Secretary of Commerce for Technology, gave a
speech on nanotechnology.
He said that "uninformed public fear" of nanotechnology could lead to regulation
the denies the economic and societal benefits that may flow from nanotechnology.

Wu (at right) stated
that "the next big thing is actually very, very
small -- it's nanotechnology."

He said that the Bush administration "is committed to having our nation be
at the forefront of nanotechnology. The President believes strongly in the economic
gains and social advances
that nanotechnology can bring to the citizens of the United States and to the
rest of the world. This is why the Federal investment in nanotechnology has grown from $116
million in 1997 to more than $700 million in 2003 and President Bush has
proposed funding of $849 million for nanotechnology for Fiscal Year 2004."

He also cautioned that "its revolutionary nature will challenge our regulatory
systems which may also have to cope with uninformed public fear of potential
negative consequences of nanotechnology."

Wu continued that "If we fail to create appropriate regulatory regimes with
the flexibility to adapt to rapidly advancing technologies -- such as nanotechnology
-- we will deny ourselves extraordinary economic and societal benefits. And other
nations will be sure to step into the vacuum. Comparative advantage will accrue to
countries that find the right approach to regulatory oversight -- balancing legitimate
societal interests."

He concluded that "If U.S. industry performs well, by successfully seizing
the opportunities
spawned by public and private nanotechnology research, then our economy and our
citizens will prosper. We need to do so in a regulatory environment that is fair, open, and
transparent -- a framework that allows good science to overcome overly
bureaucratic and burdensome restrictions."

More News

10/8. The Federal Communications Commission
(FCC) issued an
Order and Authorization [52 pages in PDF] that authorizes, subject to certain
conditions, the transfer of licenses incident to Singapore Technologies Telemedia's
(ST Telemedia) acquisition of the assets of the bankrupt Global Crossing
(GC). GC owns and operates a global fiber optic network. In January of 2002, GC
and subsidiaries filed Chapter 11 bankruptcy petitions in U.S. bankruptcy court.
Global Crossing will transfer assets to GC Acquisition Limited (New GX). ST
Telemedia will obtain common and preferred stock equal to a controlling interest
of 61.5 percent of New GX's equity. The FCC's review involved competition
analysis, foreign investment analysis, and national security analysis. This is
IB Docket No. 02-286. See also, FCC
release [2 pages in PDF].

10/8. The Federal Communications Commission
(FCC) announced that since October 1, it has
received 2,379 complaints about alleged violations of the do-not-call rules
and 5,879 inquiries about the rules. See, FCC
release.

10/8. The Copyright Office (CO)
published a
notice in the Federal Register stating that the CO "is requesting public
comment on the adoption of regulations for records of use of sound recordings
performed pursuant to the statutory license for public performances of sound
recordings by means of digital audio transmissions between October 28, 1998, and
the effective date of soon-to-be-announced interim regulations." Comments are
due by November 24, 2003. Reply comments are due by December 22, 2003. See,
Federal Register: October 8, 2003, Vol. 68, No. 195, at Page 58054.

10/1. Directv, Inc. and EchoStar Satellite Corporation filed a complaint in
state court in Raleigh, North Carolina against the State of North Carolina's
Department of Revenue alleging that the state's 5% sales tax on direct broadcast
satellite services violates the Commerce Clause of the U.S. Constitution. The
plaintiffs assert that the tax is discriminatory because the state does not also
tax cable services. See, Directv
release. The plaintiffs have also recently brought similar suits against
other states.

9/29. Carly Fiorina, CEO of Hewlett Packard,
gave a lofty
speech in Detroit, Michigan in which she addressed the history of, and
economic prospects for, "the Arab world" and "the Islamic world", and how
information technology can create opportunities. She said that "for all that
technology means in countries like the U.S., its potential is even greater for
regions like the Middle East. As we've seen, our newest technology applied to
solutions like telemedicine, teleagriculture, and distance learning has a unique
ability to help countries leapfrog years of development, to close the gap
between technology-empowered communities and technology-excluded communities."
She concluded that "We really do believe that if we focus on the possibilities
and not just the problems; if we focus on the economics, and not just the
politics of the Arab world -- within a generation, we really will see education
for everyone, with schools that are totally networked, and students and parents
who interact over the Internet."

Notice

The TLJ Daily E-Mail Alert will not be published on Friday,
October 10, or on Monday, October 13.

The Supreme Court will hear
oral argument in Verizon v. Law Offices of Curtis Trinko, No. 02-682.
This is a case involving the application of Section 2 of the Sherman Antitrust
Act, 15 U.S.C. § 2,
in the context of telecommunications. See,
TLJ story
titled "Supreme Court Grants Certiorari in Verizon v. Trinko", March 10, 2003.

10:00 AM. The Senate
Banking Committee will consider several nominations
including Harvey Rosen and Kristin Forbes
to be members of the Council of Economic Advisers, Julie Myers and
Peter Lichtenbaum to be Assistant Secretaries of Commerce for Export
Enforcement. The Committee will then hold a hearing on the renominations of Roger Ferguson
to be Vice Chairman of the Board of Governors of the Federal Reserve System,
and Ben Bernanke
to be a member of the Board of Governors. See,
notice. Location: Room 538, Dirksen
Building.

2:00 - 4:00 PM. The Department
of Homeland Security's (DHS) National Infrastructure Advisory Council (NIAC) will
meet telephonically. The agenda provides that the NIAC will receive the findings
and propose recommendations developed by its working groups on Cross Sector
Interdependencies and Risk Assessment Guidance and Regulatory Guidance, and
receive status briefings on the continuing activities of its working groups on
Vulnerability Disclosure Guidelines and the Evaluation and Enhancement of
Information Sharing and Analysis. The NIAC is also accepting written comments.
To listen only, call 1-877-888-4034. See,
notice in the Federal Register, October 7, 2003, Vol. 68, No. 194, at Page
57914.

Deadline to submit comments to the
LOCAL Television Loan Guarantee Board's regarding the information and
recordkeeping requirements of the proposed regulation to implement the LOCAL
Television Loan Guarantee Program, as authorized by the Launching Our
Communities' Access to Local (LOCAL) Television Act of 2000. The purpose of
the Act is to facilitate access to signals of local TV stations in nonserved
areas and underserved areas. The Act establishes a LOCAL Television Loan
Guarantee Board to approve guarantees of up to 80% of loans totaling no more
than $1.25 Billion. The regulation proposes to establish eligibility and
guarantee requirements, the application and approval process, the
administration of guarantees, and the process through which the Board will
consider applications under the priority considerations required in the Act.
See,
notice in the Federal Register, August 15, 2003, Vol. 68, No. 158, at Pages
48814 - 48833. See also, Treasury
release.

10:00 AM. The
House Ways and Means Committee will continue its hearing titled "United
States -- China Economic Relations and China's Role in the Global Economy".
See,
notice. Location: Room 1100, Longworth Building.

2:30 - 4:30 PM. Federal Communications
Commission (FCC) International Bureau (IB) will
hold a public forum to examine the methods and practices the FCC used
in preparation for 2003 World Radioconference (WRC-03), and to assess whether
the process can be improved. The FCC seeks public views on how the FCC could
further facilitate public participation, increase transparency, intensify its
international outreach and generally promote public interest goals in the WRC
preparatory process. See,
notice [PDF]. Location: FCC, Commission Meeting Room (Room TW-C305), 445
12th Street, SW.

Deadline to submit requests to the Trade Policy Staff Committee (TPSC) to
testify at its November 5, 2003 hearing on negotiations with Bahrain on a free
trade agreement (FTA). The TPSC seeks comments and testimony to assist the
Office of the U.S. Trade Representative (USTR)
on many topics, including "Relevant trade-related intellectual property rights
issues that should be addressed in the negotiations" and "Existing barriers to
trade in services between the United States and Bahrain that should be
addressed in the negotiations". See,
notice in the Federal Register, August 25, 2003, Vol. 68, No. 164, at
Pages 51062 - 51064.

Deadline for the Federal
Trade Commission (FTC) to submit its brief to the U.S.
Court of Appeals (10thCir) in FTC v. Mainstream Marketing Service,
No. 03-1429. This is the telemarketers' constitutional challenge to the FTC's
do not call registry. See, October 8, 2003
order [24 pages in
PDF] staying the District Court's opinion, and setting an expedited schedule.

NBC and Vivendi Announce Merger
Plans

10/8. General Electric and
Vivendi Universal announced that
they have signed a definitive agreement for the merger of NBC (which is a division
of GE) and Vivendi Universal Entertainment (VUE). The new company will be
80%-owned by GE, with 20% held by the shareholders of VUE. See,
GE release.

The proposed merger is subject to regulatory approvals.
Sen. Mike DeWine (R-OH) and
Sen. Herb Kohl (D-WI), the Chairman and ranking
Democrat on the Senate Judiciary
Committee's Subcommittee on Antitrust, Competition Policy and Consumer Rights
issued a joint statement. They wrote that "The combination of NBC and Vivendi
Universal's media holdings is the latest example of the increasing
consolidation in our media industry, a trend which should concern all of us who
care about the diversity of viewpoints available to all Americans. We need to
scrutinize this deal closely to examine its implications for competition in
media marketplace, and expect to be holding a hearing shortly."

Stephen Gordon is a medical artist. He has drawn, and copyrighted, dental
illustrations. Nextel is a communications company. Nextel and its advertising
agency, Mullen Advertising, produced and published a television commercial in which
Gordon's illustrations appear. They did not obtain authorization from Gordon.

Gordon filed a complaint in U.S. District Court (EDMich) against Nextel and
Mullen alleging copyright infringement, and removal of copyright notice. The
District Court ruled that the use constituted fair use and was de minimis, and
that there was therefore no infringement. It also ruled that Gordon had failed to
introduce evidence of intentional removal of copyright notice.

The Appeals Court affirmed. It first held that the use of the illustrations was
de minimis. Hence, there was no copyright infringement. The Court did not
proceed to examine the fair use defense. The Appeals Court affirmed the
District Court on the copyright notice removal claim. He failed to introduce
evidence of intent, as required by
17 U.S.C. § 1202(b).

This case is Gordon v. Nextel Communications and Mullen Advertising, Inc., No. No.
01-2274, an appeal from the U.S. District Court for the Eastern District of
Michigan, at Detroit, Judge John O'Meara presiding, D.C. No. 00-73201.

More Court Opinions

10/8. The U.S.
Court of Appeals (4thCir) issued its
opinion [PDF]
in Bouchat v. Baltimore Ravens, a copyright case involving the artwork
used by the Baltimore Ravens football team.
The District Court, following a jury trial, found that Bouchat's copyright had
been infringed, but awarded him no portion of the Ravens' profits as damages. He
asserted that the District Court erroneously failed to accord him the benefit of a statutory
presumption that an infringer's revenues are entirely attributable to the infringement.
The Appeals Court affirmed. This case is Frederick Bouchat v. Baltimore Ravens
Football Club, Inc., et al., No. 02-1999, an appeal from the U.S.
District Court for the District of Maryland, at Baltimore, Judge Marvin Garbis
presiding, D.C. No. CA-97-1470-MJG.

10/6. The U.S. Court of Appeals
(9thCir) issued its
opinion [PDF] in Lamps Plus v. Seattle Lighting Fixture, a
copyright case involving table lamps. This case is Lamps Plus, Inc. v. Seattle
Lighting Fixture Co., et al., Nos. 01-35352, 01-35399 and 01-35484, appeals
from the U.S. District Court for the Western District of Washington.

10/8. The U.S.
Court of Appeals (6thCir) issued its
opinion
in Miller v. Champion Enterprises, a class action securities fraud
case involving the Private Securities Litigation Reform Act (PSLRA). The District
Court dismissed the complaint for failure to meet the heightened pleading
requirements for scienter under the PSLRA. The Appeals Court affirmed. This case
is Joel Miller, et al. v. Champion Enterprises, Inc., No. 01-1955, an appeal
from the U.S. District Court for the Eastern District of Michigan, at Detroit,
Judge John Feikens presiding, D.C. No. 99-74231.

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